7. RECENT TRENDS AND DEVELOPMENTS

7.01 State Sales and Use Tax

Several states have amended their laws to exemption aircraft repairs and overhauls from sales tax. The motivation for this legislation appears to be to encourage aircraft repair shops to locate in the state.

However, this exemption can lead to some odd results:

• Since repairs are exempt, while the aircraft are not, an aircraft buyer can save taxes by purchasing an aircraft which is in need of refurbishment for a low price, and having the aircraft refurbished tax-free.
• The states which exempt only repairs made to nonresident aircraft are discriminating against residents, who must pay tax.